North Carolina’s State Health Plan will move to a three-tiered provider network in 2027, a move approved by the plan’s Board of Trustees on March 17, 2026, in an effort to control rising healthcare costs. The decision comes after the plan successfully closed a $507 million deficit in 2025, according to Tom Friedman, the State Health Plan administrator.
Friedman presented the tiered proposal to trustees on Tuesday, outlining a strategy to reduce costs by directing more plan participants to preferred providers. He argued that increased patient volume could lead to significant discounts, potentially as high as 50%, through negotiation. The plan serves approximately 750,000 state employees, teachers, retirees, and their dependents.
The three-tiered system will designate providers based on their willingness to negotiate lower costs. An “Access Provider” tier will maintain access in rural areas and out-of-state where provider options are limited. A “Non-preferred Provider” tier will include those who have not agreed to lower costs, resulting in higher out-of-pocket expenses for plan participants who choose them. According to Friedman, allowing providers to charge without constraint is “not a sustainable approach.”
The State Health Plan has already begun experimenting with steering patients to preferred providers. In July 2025, a partnership with Lantern offered plan members no-cost surgery for procedures performed by Lantern doctors. As of early March 2026, more than 400 surgeries and procedures had been completed through the platform. Friedman indicated a desire to expand this model to non-surgical care.
Friedman stated the goal is to have 90% of plan members utilizing preferred or access providers. He noted that 70% of care delivered to plan participants currently occurs in just 10 counties, suggesting a willingness among members to travel for lower-cost, high-quality care.
Beyond the tiered network, plan officials are considering linking future premium growth to wage growth. Under this proposal, a 1% raise would result in a 1% premium increase. For an employee currently paying $50 a month for standard coverage, this would translate to a $0.50 increase.
Concerns about the plan’s administration were raised during the meeting. Charles Owens, a health care technician and union leader from Cherry Hospital in Goldsboro, urged the trustees to end the relationship with Aetna, the state’s third-party administrator, claiming that premiums and co-pays have doubled since Aetna took over in 2025. He described colleagues delaying preventative care due to cost, leading to more critical and expensive health issues. A representative for Aetna clarified that the company does not set premiums, copays, or benefits, stating those decisions rest with the State Health Plan’s Board of Trustees.
Suzanne Beasley with the State Employee Association of North Carolina advocated for greater transparency, urging trustees to make provider contracts public information to facilitate negotiations for lower costs.
The copays associated with each tier of the novel provider network will be determined at the board’s June 5, 2026 meeting.
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